Delhi District Court
Giriraj Gupta vs Kamal Arora on 21 May, 2025
IN THE COURT OF JUDICIAL MAGISTRATE FIRST CLASS-02,
NORTH EAST DISTRICT, KARKARDOOMA COURTS, DELHI
PRESIDED BY: SH. ANMOL NOHRIA, DJS
CC No. : 317/2020
U/s : 138 N. I. Act
P.S : New Usmanpur
Giri Raj Gupta v. Kamal Arora
- : J U D G M E N T :-
1. CC No. : 317/2020
2. Date of institution of the case : 11.02.2020
3. Name of complainant : Giri Raj Gupta
S/o Lt. Sh. Ganja Ram Gupta
R/oC-4, Gali No. 06,
Brahmpuri, Delhi-53
4. Name of accused, parentage
and address : Sh. Kamal Arora
S/o Sh. Bhola Nath
Digitally signed
by ANMOL R/o 1/9152, Rohtash Nagar,
ANMOL NOHRIA
Date:
NOHRIA 2025.05.21
15:42:17
+0530
Shahdara, Delhi-32
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 1 of 33
(Anmol Nohria)
JMFC-02/NE/KKD/Delhi
5. Offence complained of : 138 N. I. Act
6. Plea of accused : Accused pleaded not guilty
7. Final order : Acquitted
8. Date on which order was
reserved : 02.04.2025
9. Date of pronouncement : 21.05.2025
1. The instant matter has originated out of a complaint under
section 200 Cr.PC read with Section 142 Negotiable Instruments Act
(hereinafter referred to as the 'N I Act'), filed by the complainant company
against the accused under Section 138 N I Act alleging that cheque bearing
number- 109722dated 15.11.2019 amounting to Rs. 1,00,000/-,drawn on
Dena Bank, Shahdara issued by the accused in favour of the complainant,
in discharge of a legal debt or other liability, has been dishonored and the
accused has not paid the said amount even after receiving the prescribed
legal demand notice. By virtue of this judgment, the present complaint is
being disposed off.
Digitally signed
by ANMOL
ANMOL NOHRIA
Date:
NOHRIA 2025.05.21
15:42:24
+0530
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 2 of 33
(Anmol Nohria)
JMFC-02/NE/KKD/Delhi
BRIEF REASONS FOR THE DECISION OF THE CASE
FACTUAL BACKGROUND OF THE CASE:
2. Briefly stated facts of this case as per complaint are that accused had made an agreement to sell of property bearing number S-11, Old Plot no.24, Naveen Shahdara for a sum of Rs.94,00,000 on 18/05/2018, out of which complainant paid a total of Rs.20,00,000 as earnest money; and accused had promised to deliver fully furnished first floor of the same. However, nothing was ready by 31/01/2019, therefore accused requested the complainant to extend the agreement till 10/05/2019, but again accused failed to deliver the same and thereafter, at the request of accused another agreement to sell was made on 09/05/2019 wherein accused promised to deliver fully furnished the property fully furnished till 10/01/2020, when the agreement was to be executed. In furtherance of the agreements to sell the complainant had paid a total of Rs. 40,00,000 via various modes on various dates. It was further agreed that on failure the accused will pay Rs. 60,00,000 on or before 10/01/2020 and with 2% interest after the same. Since, no construction work was going on in October 2019 when complainant visited the property, so the parties mutually orally terminated the agreement dated 09/05/2019 and in the second week of October 2019, accused towards the valuable consideration and in discharge of the liability, handed over cheque bearing no. 109722 Digitally signed by dated 15/11/2019 amounting to Rs. 10,00,000/-,drawn on Dena Bank to ANMOL ANMOL NOHRIA NOHRIA Date:
2025.05.21 15:42:29 +0530 CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 3 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi the complainant, with assurance that the same will be encashed on their presentation but the same was returned unpaid with remarks "payment stopped" vide returm memo dated 15/11/2019. Therafter, the complainant after asking the accused again presenet the same but same was returned unpaid with remarks "payment stopped" vide returm memo dated 27/12/2019 14.07.2017. Complainant got issued a legal notice dated 07.01.2020 but, no payment was made by the accused and hence, the present complaint was filed.
PROCEEDINGS BEFORE COURT
3. On the basis of pre-summoning evidence, accused was summoned by the court for the offence under Section 138 of Negotiable Instrument Act. The accused put in his own appearance and thereafter notice under Section 251 Cr.P.C. was framed upon the accused on 21.04.2022 to which accused pleaded not guilty and claimed trial. In his plea of defence, the accused stated that the complainant on 15/11/2019 came to his house with 2-3 associates and pressurized him to handover blank security cheque to secure his construction and he issued the same under pressure. He has also made written complaint to SHO, PS Shahdara vide DD no. 18A dated 15/11/2019 and has no liability towards him. Statement under Section 294 Cr.P.C of the accused was also recorded on Digitally 21.04.2022, wherein he has admitted his signatures on the cheque in signed by question but denied receiving legal demand notice.
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:35
+0530
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 4 of 33
(Anmol Nohria)
JMFC-02/NE/KKD/Delhi
4. Vide order dated 21.04.2022 the accused to cross examine the complainant and request has been allowed to cross examine the complainant under Section 145 (2) NI Act on no objection given by the counsel for the complainant.
5. During the trial, complainant has led the oral and documentary evidence against the accused to prove his case beyond reasonable doubt. The following evidence are as under:
Oral Evidence CW1 Farha Deba (Complainant) Documentary Evidence Ex. CW1/A Evidence Affidavit Mark A Collaboration Agreement Mark B Copy of GPA Ex. CW-1/1 Agreement Digitally signed ANMOL by ANMOL NOHRIA Ex. CW-1/2 Agreement to Sell Date:
NOHRIA 2025.05.21 15:42:40 +0530 Ex. CW-1/3 Bank Statement of Complainant Ex. CW-1/3A Bank statement of wife of Complainant Ex. CW-1/4 Original Cheque CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 5 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi Ex. CW-1/5 Cheque return memo Ex. CW-1/6 Legal demand notice Ex. CW-1/7 Postal receipt Ex. CW-1/8 Legal Notice sent by accused Ex. CW-1/9 Photographs Ex. CW-1/10 FIR
6. The complainant was cross examined at length by the counsel for the accused on 24.11.2022. Thereafter the complainant's evidence was closed. Statement of accused was recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 on 17.01.2023. Incriminating evidence was put to him wherein he has admitted agreement to sell, signatures on cheque, reply to legal demand notice but denied oral termination of agreement and extension agreement and stated that construction was stopped by MCD and complainant stated that he will not purchase the flat and requested to return the money and that complainant had threatened him and took the cheque and that he never gave instruction to present the cheque on said dates.
Digitally signed by ANMOLANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:44 +0530
CC No. 317/2020
Giri Raj Singh v. Kamal Arora
Page no 6 of 33
(Anmol Nohria)
JMFC-02/NE/KKD/Delhi
7. Thereafter, the matter was listed for defence evidence and accused has examined ASI Satender and HC Pradeep as DW1 and DW2 to prove DD No.18A as Mark D1, Mark D2 and Mark D3.Thereafter, DE was closed and matter was listed for final arguments.
8. Afterwards, final arguments were heard on behalf of both the parties and after hearing the arguments, trial was concluded.
9. It has been argued that the complainant has been able to prove his case by way of presumptions in his favor and the accused has failed to rebut the same by leading any cogent evidence. It has been further argued that the accused in his various statements has admitted to issuance of cheques as well as his liability but has not been able to rebut the presumptions of law. It has been further argued that the accused failed to discharge the burden cast upon him and has put forward a false defence; and has failed to lead any evidence to rebut the version of the complainant; consequently, the case of the complainant stands proved in view of the Digitally same.
signed by
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:42:50
+0530
10. Per contra, it has been argued that the case of the complainant is false one. It has been argued that the complainant has not been able to prove his case beyond reasonable doubt for securing a conviction; and the accused by way of cross examination of the complainant has been able to CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 7 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi dislodge the version of the complainant. It is submitted that the accused is defending the case upon the following grounds:
i. Accused has never received the legal demand notice; ii. The impugned cheque was blank signed security cheque issued to the complainant under pressure; iii. The accused does not have liability as per the version of the complainant as the debt alleged has not legally become enforceable.
11. I have heard the counsels for both the parties; perused the record and have gone through relevant provisions of the law and the judgments relied upon by both the parties.
INGREDIENTS OF OFFENCE AND DISCUSSION-
12. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 138 of NI Act, the prosecution must fulfill all the essential ingredients of the offence. Perusal of the bare provision reveals the following necessary ingredients of the offence:-
First Ingredient: The cheque was drawn by a person on an account maintained by him for payment of Digitally signed by ANMOL ANMOL NOHRIA money and the same is presented for payment within Date:
NOHRIA 2025.05.21 15:42:54 a period of 3 months from the date on which it is drawn or within the period of its validity; +0530 CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 8 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi Second Ingredient: The cheque was drawn by the drawer for discharge of any legally enforceable debt or other liability;
Third Ingredient: The cheque was returned unpaid by the bank due to either insufficiency of funds in the account to honour the cheque or that it exceeds the amount arranged to be paid from that account on an agreement made with that bank; Fourth Ingredient: A demand of the said amount has been made by the payee or holder in due course of the cheque by a notice in writing given to the drawer within thirty days of the receipt of information of the dishonour of cheque from the bank; Fifth Ingredient: The drawer fails to make payment of the said amount of money within fifteen days from the date of receipt of notice.
13. It is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the NI Act
14. The accused can only be held guilty of the offence under Section 138 NI Act if the above-mentioned ingredients are proved by the complainant co-extensively. Additionally, the conditions stipulated under Section 142 NI Act have to be fulfilled.
Digitally signed by ANMOLANMOL NOHRIA NOHRIA Date:
2025.05.21 15:42:58 +0530 CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 9 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi APPRECIATION OF EVIDENCE-
15. Notably, there is no dispute qua the proof of first and fifth ingredient. The complainant had proved the original cheque vide Ex. CW1/4which the accused had not disputed as being drawn on the account of the accused. It was not disputed that the cheque in question was presented within its validity period. Notably, no dispute has been raised qua the fifth ingredient as such the same is deemed to be proved that no payment has been made after issuance of legal demand notice.
16. As far as the third ingredient is concerned, the complainant is only required to prove the dishonor of the cheque for the reasons attributable to the accused. In the instant case, the cheque in question was returned unpaid vide return memos Ex. CW1/5. At this stage a reference can be drawn from Section 146 of NI Act as per which the court shall on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved. In the instant case perusal of the cheque return memo Ex. CW1/5 shows that they Digitally ANMOL signed by ANMOL NOHRIA bear a stamp of the bank with signature and date. Further, neither any NOHRIA Date:
2025.05.21 15:43:02 +0530 question as to the factum of dishonor has been put to the complainant in the cross examination nor any evidence regarding the same has been brought in the defence. Thus, no evidence has been led to disprove the fact CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 10 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi of dishonor. Further, the Hon'ble Delhi High Court in the case of Guneet Bhasin vs State of NCT of Delhi & Anr. & Ors; 2022/DHC/005048, has observed that the purpose of the cheque return memo is to give the information of the holder of the cheque that his cheque on presentation could not be encashed due to the variety of reasons as mentioned in the cheque return memo. From the discussion above it can be concluded that there is no need for the complainant to examine any bank witness to prove the cheque return memo if it falls in the ambit of Section 146 NI Act. Ergo, the factum of dishonor stands proved in view of Section 146 and consequently third ingredient stands proved.
17. So far as the legal demand notice is concerned it is one of the statutory requirements in order to bring home the guilt of the accused under section 138. Any defect in the statutory requirement would go to the very root of the proceedings as such it is essential to first discuss whether the legal notice issued by the complainant in compliance with the provisions of section 138 or not. Provisio (b) appended to Section 138 with respect to legal demand notice is reproduced below for ready reference:
Digitally signed(a) "The payee or the holder in due course of the ANMOL by ANMOL NOHRIA Date:
cheque, as the case may be, makes a demand for the NOHRIA 2025.05.21 15:43:06 +0530 payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days] of the receipt of information by CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 11 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi him from the bank regarding the return of the cheque as unpaid;"
18. As such, it is necessary that the payee or holder in due course makes demand of money due by giving a notice to the drawer, in writing, within 30 days of receipt of information from the bank regarding the return of the cheque is dishonoured. The object of notice is to give a chance to the door of the cheque to rectify his omission and also to protect an honest drawer. Reliance is placed upon, Central Bank of India vs Saxons Farms , 1999(39) ACC891(SC).
19. In the factual matrix of the present case, the accused in his statement u/s 294 has denied receiving the legal demand notice but in his statement u/s313 r/w 281 Cr.P.C has admitted to receiving of the same.
20. However, perusal of the cross examination of the complainant, shows that no question qua the legal demand notice or the address of the accused has been put by the accused to deny the service apart from a suggestion that no legal notice was sent which has been denied by the Digitally signed by complainant. Further, the summons have also been served to the accused at ANMOL ANMOL NOHRIA NOHRIA Date:
2025.05.21 15:43:10 the same address and the accused has also in his particulars at stage of +0530 notice framing, statement u/s 313 has mentioned the address as mentioned upon legal demand notice Ex. CW1/6. Furthermore, the notice sent by the CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 12 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi accused Ex. CW1/8 has also been sent from the same addresss as mentioned on Ex.CW1/6.
21. In the landmark decision of Hon'ble Supreme Court of India in matter of "C. C. Alavi Haji Vs. Palapetty Mohd. & Anr." reported in (2007) 6 Supreme Court Cases 555 held that as under:-
"16. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the Digitally signed complaint is liable to be rejected. A person who ANMOL by ANMOL NOHRIA does not pay within 15 days of receipt of the NOHRIA Date:
2025.05.21 15:43:14 summons from the Court along with the copy of the +0530 complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation, of the proviso would defeat the very object of the legislation. As observed in Bhaskarans case (supra), CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 13 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
22. The perusal of the address mentioned on the memo of parties, the legal demand notice Ex. CW1/6 and Ex. CW1/8, summons, notice u/s 251 Cr.P.C. and statement of accused under section 313 of Cr.P.C shows that addresses are same. Hence, placing reliance upon Hon'ble Supreme Court of India in matter of "C. C. Alavi Haji Vs. Palapetty Mohd. & Anr(Supra), there is a deemed delivery of legal demand notice. Consequently, the legal demand notice Ex. CW1/6 and postal receipts Ex. CW1/7 is deemed to be proved. Hence, the requirements of fourth ingredient stand complied with.
23. As far as the proof of second ingredient is concerned, the Digitally signed by ANMOL ANMOL NOHRIA complainant has to prove that the cheque in question was drawn by the NOHRIA Date:
drawer for discharging a legally enforceable debt. However, as per the 2025.05.21 15:43:20 +0530 scheme of the NI Act, once the accused admits signature on the cheque in question, certain presumptions are drawn, which result in shifting of onus. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 14 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi presumption is enumerated in Section 139 of NI Act. The provision lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability.
24. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved. Reliance is placed upon the judgment of the Hon'ble Supreme Court, Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16.
25. Further, it has been held by a three-judge bench of the Hon'ble Apex Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by Digitally ANMOL signed by ANMOL NOHRIA establishing a probable defence. The principles pertaining to the NOHRIA Date:
2025.05.21 15:43:25 +0530 presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:CC No. 317/2020
Giri Raj Singh v. Kamal Arora Page no 15 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi "25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner: 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence.
Digitally signedby ANMOL Section 139 imposed an evidentiary burden and not ANMOL NOHRIA Date:
NOHRIA 2025.05.21 a persuasive burden.
25.5. It is not necessary for the accused to come in 15:43:30 +0530 the witness box to support his defence."
26. Thus, the presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 16 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi preponderance of probabilities to prove that either there was no legally enforceable debt or other liability.
27. In this case, the accused in his plea of defence has stated that he was pressurized by the complainant into issuing the cheque through his associates in as security for his floor on 15.11.2019 for which written police complaint has been given by him. Consequently, the accused has raised the following defences to rebut the presumptions:
a) The cheque in question is blank security cheque;
Digitally signed by
b) The accused does not have liability as per the version of the ANMOL ANMOL complainant as the debt alleged has not legally become NOHRIA NOHRIA Date:
2025.05.21 15:43:34 +0530 enforceable.
28. I will be discussing both the defences separately.
a.) The cheque in question is blank security cheque:
29. It has been stated by the accused that the cheque in question was a blank security cheque issued under pressure of complainant and the complainant has himself filled the particulars of the same before presenting them.
30. At this stage reference can be drawn from Section 20 of the NI Act talks about inchoate instruments. As per this provision if a person CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 17 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi gives a duly signed cheque which is either blank or partly filled then he is deemed to have given implied authority to the holder to fill up the particular in it and complete the cheque, thus making the drawer liable for the payment mentioned in it. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provision of section 138 would be attracted
31. The Hon'ble Supreme Court in the case of Bir Singh vs. Mukesh Kumar (2019) 4 SCC 197 wherein the Apex Court while upholding the validity of blank signed cheque in a proceeding u/s 138 of the Act has interalia held the following:
"If a signed blank cheque is voluntarily presented to a payee,towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would Digitally signed by ANMOL ANMOL NOHRIA still be on the accused to prove that the cheque was NOHRIA Date:
2025.05.21 not in discharge of a debt or liability by adducing 15:43:39 +0530 evidence."
32. Notably, in the case of Suresh Chandra Goyal Vs. Amit Sing- hal, Crl.L.P. 706/2014, it was held by the Hon'ble Delhi High Court that:
"The appellant was well within his rights to enforce CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 18 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi the security in respect whereof the cheques in ques- tion were issued and to seek to recover the out- standing debt by encashment of the said cheques. Since the cheques in question were dishonoured upon presentation, the accused suffered all con- sequences as provided for in law and the appellant became entitled to invoke all his rights as created by law. Thus, the appellant was entitled to invoke Section 138 of the NI Act; issue the statutory notice of demand, and; upon failure of the accused to make payment in terms of notice of demand - to ini- tiate the complaint under Section 138 of the NI Act."
33. It is noteworthy that the Hon'ble Apex Court in the case of Sripati Singh Vs. The State of Jharkhand and Ors., AIR 2021 SC 5732, has held that:
"16. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or Digitally signed by ANMOL pledged to make certain the fulfilment of an ANMOL NOHRIA Date:
obligation to which the parties to the transaction NOHRIA 2025.05.21 15:43:43 +0530 are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 19 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated Under Section 138 and the other provisions of N.I. Act would flow.
17.When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be Digitally signed by understanding between the parties is a sine qua non ANMOL ANMOL NOHRIA to not present the cheque which was issued as NOHRIA Date:
2025.05.21 15:43:47 +0530 security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated Under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast Rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 20 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."
34. Further, in case of Credential Leasing & Credits Ltd. Vs. Shruti Investments & Ors., 2015 (4) JCC 252, it was held that:
"30. Thus, I am of the considered view that there is no merit in the legal submission of the respondent accused that only on account of the fact that the cheque in question was issued as security in respect of a contingent liability, the complaint under Section 138 of the NI Act would not be maintainable. At the same time, I may add that it Digitally signed by ANMOL ANMOL NOHRIA would need examination on a case to case basis as Date:
NOHRIA 2025.05.21 15:43:52 to whether, on the date of presentation of the dishonoured cheque the ascertained and crystallised +0530 debt or other liability did not exist. The onus to raise a probable defence would lie on the accused, as the law raises a presumption in favour of the holder of the cheque that the dishonoured cheque was issued in respect of a debt or other liability. As CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 21 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi settled by the Supreme Court, the said onus obliges the accused to raise a defence - either by picking holes in the case of the complainant and/ or by positively leading defence evidence which leads the Court to believe that there is a probable defence raised by the accused to the claim of the complainant with regard to the existence of the debt or other liability. The said onus does not cast as stringent an obligation on the accused, as it casts on the complainant, who has to prove beyond reasonable doubt the guilt of the accused."
35. Thus, it is a settled of the proposition of law that a check issued a security, pursuit of financial transaction, cannot be considered as a worthless piece of paper. It is given to ensure the fulfillment of an obligation undertaken. If a check issued to secure repayment of a loan advanced and if the loan is not repaid on or before the due date, the drawee would be entitled to get the cheque for payment, and if such a cheque is dishonored, the consequences contemplated under section 138 NI act would follow. Reliance is placed upon Sripati Singh v. State of Jharkhand,2021 SCCOnline1002. Further as to the plea of cheque being a Digitally signed by ANMOL ANMOL security check, it was held in ICDS v. Beena Shabir & Anr. (2002)6 SCC NOHRIA Date:
NOHRIA 2025.05.21 15:43:57 +0530 426, that security checks would also fall within the purview of section 138 NI act and a person cannot escape is liability unless he proves that the debt or liability for which cheque was issued as security is satisfied otherwise.CC No. 317/2020
Giri Raj Singh v. Kamal Arora Page no 22 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi
36. With regards to the submission that the cheque was issued under the pressure of the police, the accused while cross examining the complainant has never asked any question qua the same, never confronted her with any such complaint made to the police. However, accused had summoned DW2 to prove his complaint regarding the pressure exerted by the complainant, who has produced a DD entry no. 18A dated 15.11.2019 but has also produced order of ACP HQ Mark D3, as per which record has been destroyed. Perusal of Mark D2, shows that though a DD entry has been made at the instance of the accused on 15.11.2019, however its contents or allegations of the accused are not a part of the same. Further, the accused has not produced any copy of the complaint given by him vide the said DD entry where the same has been endorsed by the PS to prove the contents of the same in order to substantiate his stand. In terms of Section 101 of Indian Evidence Act a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. In otherwords " he who asserts must prove" the standard of proof in civil cases is preponderance of probability, while in the criminal cases the standard of proof is beyond the reasonable doubts. If no evidence at all is Digitally ANMOL signed by ANMOL NOHRIA adduced by either side, the person on whom the burden of proof lies would NOHRIA Date:
fail. One who asserts a particular fact is in existence, then he has to prove 2025.05.21 15:44:02 +0530 the said fact unless and until the law says that the burden lies on anymore else; and in the instant case the burden to prove issuance under pressure CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 23 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi from police was upon the accused and in view of the discussion above, he has failed to discharge the same.
37. Ergo, in light of the above discussion, this court is of the considered view that, the ground that the cheque in question is a blank security cheque does not hold water with this court and even in case of blank signed cheque, the statutory presumptions under section 118(a) and 139 would be raised in favour of the complainant. Therefore, in instant case, since, the accused has admitted the execution of impugned cheque, the aforementioned statutory presumptions would be raised in favour of the complainant regarding the fact that the impugned cheque have been drawn for consideration and issued by the accused in discharge of legally enforceable debt.
b.) The accused does not have liability as per the version of the complainant as the debt alleged has not legally become enforceable:
38. In the instant case, the version of the complainant in the complainant is that the accused has issued the impugned cheques in order to discharge his liability to repay the amount advanced by the complainant through agreement to sell dated 18.05.2018 and 09.05.2019, which being Digitally ANMOL signed by ANMOL NOHRIA mutually and orally being terminated in first week of October 2019, NOHRIA Date:
2025.05.21 15:44:08 +0530 wherein the accused had agreed to pay Rs.60,00,000 on or before 10.01.2020 on failure to construct the same. It has been argued by the CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 24 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi complainant that the cheque has been issued to return part payment made by the complainant from the commitment of Rs.60,00,000 given by the accused vide agreement dated 09.05.2020 upon its termination.
39. By virtue of the presumptions the onus is upon to accused to show the debt qua the cheque amount does not exist upon him; and for the purposes of the same the accused has relied upon the cross examination of the complainant. It has been further argued on behalf of the accused that no liability has accrued to him as in terms of the agreement the said liability was supposed to accrue on his failure to deliver on 10.01.2020; and the complainant has not been able to prove the oral termination of the agreement as alleged by him.
40. Perusal of the agreement dated 09.05.2019 shows that as per clause 3 there is no liability of the accused to pay before 10.01.2020 and his liability to pay Rs.60,00,000 only arises on his failure to deliver the property in condition of possession on 10.01.2020. Further, perusal of the record shows that the impugned cheque is dated 15.11.2019 and same has been dishonored vide memo dated 31.12.2019 Ex. CW1/5. Hence, it is Digitally signed by ANMOL clear that same has been dishonored before the date as mentioned in ANMOL NOHRIA NOHRIA Date:
2025.05.21 15:44:15 agreement i.e. 10.01.2020. +0530 CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 25 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi
41. At this juncture, it becomes necessary to discuss the definition of legally enforceable debt in terms of Section 138 which has been provided in the explanation attached with the section. As per the explanation which is specific to Section 138, a debt of other liability means a legally enforceable debt or other liability.
42. In Indus Airways Private Limited v. Magnum Aviation Private Limited (2016) 10 SCC 458, the issue before a two-Judge Bench of Hon'ble Supreme Court of India was whether dishonour of post-dated cheques which were issued by the purchasers towards 'advance payment' would be covered by Section 138 of the Act if the purchase order was cancelled subsequently. It was held that Section 138 NI Act would only be applicable where there is a legally enforceable debt subsisted on the date when the cheque is drawn. Further, in the case of Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited , the respondent advanced a loan for setting up a power project and post-dated cheques were given for security. The cheques were dishonoured and a complaint was instituted under Section 138. Distinguishing Indus Airways, Digitally it was held that the test for the application of Section 138 is whether there signed by ANMOL ANMOL NOHRIA was a legally enforceable debt on the date mentioned in the cheque. It was NOHRIA Date:
2025.05.21 15:44:20 +0530 held that if the answer is in the affirmative, then the provisions of Section 138 would be attracted.CC No. 317/2020
Giri Raj Singh v. Kamal Arora Page no 26 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi
43. Further, In Sripati Singh v. State of Jharkand(Supra), it was observed that:-
"17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfillment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other Digitally understanding or agreement between the parties to signed by ANMOL defer the payment of amount, the cheque which is ANMOL NOHRIA NOHRIA Date:
2025.05.21 issued as security would mature for presentation and 15:44:24 +0530 the drawee of the cheque would be entitled present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow".
44. Also, in Credential Leasing & Credits Ltd. vs Shruti Investments & Anr. 2015(151) DRJ 147, it was held by Hon'ble High Court of Delhi that:
"28. In my view, therefore, the scope of Section 138 NI Act would cover cases where the ascertained CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 27 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi and crystallised debt or other liability exists on the date that the cheque is presented, and not only to case where the debt or other liability exists on the date on which it was delivered to the seller as a post-dated cheque, or as a current cheque with credit period. The liability, though, should be in relation to the transaction in respect whereof the cheque is given, and cannot relate to some other independent liability. If, on the date that the cheque is presented, the ascertained and crystallised debt or other liability relatable to the dishonoured cheque exists, the dishonor of the cheque would invite action under 138 NI Act. There could be situations where, for example, an issue may be raised with regard to the quality, quantity, deficiency, specifications, etc. of the goods/services supplied, or accounting. It would have to be examined on a case-to-case basis, whether an ascertained or crystallised debt or other liability exists, which could be enforced by resort to Section 138 NI Act, or not."
45. Recently, in Dashrathbhai Trikambhai Patel v/s Hitesh Mahendrabhai Patel (2023) 1 SCC 578 it is held by Hon'ble Supreme Court of India:-
"16. The judgments of this Court on post-dated cheques when read with the purpose of Section 138 indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on Digitally signed by ANMOL ANMOL NOHRIA NOHRIA Date:
2025.05.21 15:44:29 +0530 the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed. Though a post- dated cheque CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 28 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment. If there has been a material change in the circumstance such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence under Section 138 is not made out."
46. The judgments of Hon'ble Supreme Court when read with the purpose of Section 138 indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed.
47. In the case at hand the date on which the cheque has been presented for encashement the debt as per the agreemenet dated 09.05.2019 has not crystallized and same is not a legally enforceable debt and thus outside the purview of Section 138 NI Act and accused has prima facie Digitally discharged the burden cast upon him by way of presumptions.
signed by
ANMOL
ANMOL NOHRIA
NOHRIA Date:
2025.05.21
15:44:33
+0530
48. However, the case of the complainant is that the cheque has been issued after oral termination of the agreement on mutual basis in the CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 29 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi first week of October 2019.
49. At this stage it becomes necessary to refer to Section 91 & 92 of the Indian Evidence Act. As per Section 91 Indian Evidence Act when a contract, grant, or other disposition of property is in writing, the document itself is the best evidence of its terms. This means that oral evidence cannot be used to prove the terms of the document; instead, the document itself (or a legally admissible copy) must be produced. Further as per Section 92 of Indian Evidence Act, once the terms of the document have been established through Section 91, Section 92 prevents the use of oral evidence to contradict, vary, or add to those terms; this section ensures that the written agreement is the final word on its terms, and oral agreements or declarations between the parties cannot be used to alter the written agreement.
50. Further as per Proviso 4 of Sec. 92, if parties agree orally to Digitally signed by cancel or modify a document after its execution, such oral agreement may ANMOL ANMOL be proved. However, this does not apply if the contract must be in writing NOHRIA NOHRIA Date:
2025.05.21 15:44:38 by law or if it has been lawfully registered. +0530
51. Further, Section 101 of Indian Evidence Act clearly stated who ever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 30 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. An obligation to prove the case set up by the party who comes first to court i.e., whatsoever comes to court for a remedy has to prove his case. In otherwords " he who asserts must prove" the standard of proof in civil cases is preponderance of probability, while in the criminal cases the standard of proof is beyond the reasonable doubts. If no evidence at all is adduced by either side, the person on whom the burden of proof lies would fail. One who asserts a particular fact is in existence, then he has to prove the said fact unless and until the law says that the burden lies on anymore else.
52. A combined reading of Section 91, Section 92 and Section 101 of the Indian Evidence Act, thus brings us to the conclusion that a for a document reduced into writing, no oral evidence as to its modification can be given except for the purposes of rescission or cancellation; and the onus to prove such oral rescission or cancelation would be upon the party alleging the same.
Digitally
53. In the case at hand, it is the complainant who has alleged the signed by ANMOL ANMOL NOHRIA NOHRIA Date:
2025.05.21 15:44:43 +0530 oral termination of the agreement and hence onus of proving the same lies upon him. The complainant in his entire complaint or evidence has not mentioned any date upon which the said agreement was terminated and the date on which the impugned cheque was given to him. Further, he has CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 31 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi nowhere in the entire complaint mentioned any witness in who's presence the said termination had taken place. However, in his cross examination when specifically questioned about the same he has stated that he had visited the accused with a builder and upon asking the name of the said builder he has stated the name of the accused as the one. He has further improved by saying that he had gone with his son Chirag Gupta and dealer Rajesh Khana but does not remember the exact date of oral termination of the agreement.
54. Interestingly, the complainant has never cited the said persons in his list of witnesses nor has ever filed any application to summon the said witnesses in order to prove the oral termination of the agreement date 09.05.2019.
55. At this stage reference may be drawn from Section 114 of the Indian Evidence Act which in illustration (g) states that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it; and in terms of Section 114(g), a negative infer- ence can be drawn against the complainant, wherein the non-production of the said witness, shakes the legs of the case setup up the complainant as the oral termination does not stand proved.
Digitally signed by ANMOLANMOL NOHRIA NOHRIA Date:
2025.05.21 15:44:48 +0530 CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 32 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi
56. In the instant case, the onus was cast upon the complainant to show that liability of the accused stood under a liability after oral termination of the agreement; and the same has not been discharged by the complainant by failing to prove the oral termination of agreement dated 09.05.2019 in the first week of October 2019.
57. Ergo, the second ingredient of the offence u/s138 does not stand proved and the consequently, accused Kamal Arora S/o Bhola Nath is acquitted of offence u/s138 NI Act.
58. This judgment contains 33 pages. This judgment has been signed and pronounced by the undersigned in open court.
59. Let a copy of the judgment be uploaded on the official website of District Courts, Karkardooma forthwith.
Digitally signed Announced in the open Court ANMOL by ANMOL NOHRIA NOHRIA Date: 2025.05.21 On 21st May 2025 15:44:54 +0530 (Anmol Nohria) JMFC-02/NE/KKD/Delhi CC No. 317/2020 Giri Raj Singh v. Kamal Arora Page no 33 of 33 (Anmol Nohria) JMFC-02/NE/KKD/Delhi